Legislature(1995 - 1996)
05/04/1995 02:45 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE May 4, 1995 2:45 p.m. TAPES SFC-95, #61, Side 1 (121-end) SFC-95, #61, Side 2 (575-end) SFC-95, #63, Side 1 (000-500) CALL TO ORDER Senator Rick Halford, Co-chair, convened the meeting at approximately 2:45 p.m. PRESENT In addition to Co-chairman Halford, Senators Donley, Phillips, Sharp and Zharoff were present. Senator Rieger arrived soon after the meeting began. Co-chairman Frank arrived as it was in progress. ALSO ATTENDING: Deborah Behr, Assistant Attorney General, Legislation and Regulations Section, Dept. of Law; John Lindback, Chief of Staff, Office of the Lt. Governor; Chris Christensen, Staff Counsel, Alaska Court System; Dave Hutchens, Alaska Rural Electric Cooperative Association; Dennis Poshard, Director, Charitable Gaming Division, Dept. of Revenue; Bruce Campbell, aide to Representative Kelly; Tom Anderson, aide to Representative Martin; Jeff Logan, aide to Representative Joe Green; and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 167 - DAY FINES & INFO FOR COLLECTING FINES Discussion was had with Chris Christensen. The bill was held in committee for additional work by Senator Rieger. HB 17 - OFFICERS OF UTILITY COOPERATIVES Discussion was had with Jeff Logan and Dave Hutchens. An amendment deleting language (page 2, lines 28 through 30) restricting electric cooperative authority to provide direct satellite television programming services in an area certificated by the APUC for cable television was adopted. SCS CSHB 17 (Fin) was then REPORTED OUT of committee with zero fiscal notes from the Dept. of Commerce and Economic Development (Banking/Corporations) and Dept. of Commerce and Economic Development (APUC). HB 44 - GAMING PROCEEDS/DEFINE CHARITABLE ORG'NS Testimony was provided by Tom Anderson and Dennis Poshard. Amendments 1, 2, and 3 were distributed. The bill was then held in committee for further discussion. HB 130 - REGULATION ADOPTION PROCEDURES & REVIEW Testimony was presented by Bruce Campbell, John Lindback, and Deborah Behr. An amendment changing "consideration" to "attention" at page 5, line 16 was adopted. SCS CSHB 130 (Fin) was then REPORTED OUT of committee with 18 zero fiscal notes and notes from the following departments showing associated costs: Gov./Lt. Gov. $73.7 DEC (Solid Waste) 10.0 DEC (Wastewater) 4.5 DEC (Drinking Water) 6.0 DEC (Seafood Sanitation) 6.5 DEC (Palmer Lab.) 3.2 DPS (Commissioner) 5.0 DOR 20.0 CS FOR HOUSE BILL NO. 130(FIN) am(reengrossed) An Act relating to the adoption, amendment, and repeal of regulations. Co-chairman Halford directed that CSHB 130 (Fin)am (reengrossed) be brought on for discussion. BRUCE CAMPBELL, aide to Representative Kelly, came before committee. He explained that the proposed bill has a few, simple goals relating to the Regulation Procedures Act. Language in secs. 1, 2, 3, and 4 closes a loop in the process involving the Legislative Regulation Review Committee and establishes the Governor as the key elected official overseeing the regulation process. Secs. 5 and 6 deal with public comment. Sec. 5 strengthens public hearing requirements and directs agencies to pay additional attention to factual, substantive comments as well as public testimony regarding the cost of a proposed regulation. While agency staff has considerable expertise in terms of the benefits of regulations, the private sector has the most expertise in issues relating to costs. Sec. 6 incorporates a new section requiring agencies to report use or rejection of public comments. Secs. 7, 8, and 9 are housekeeping. Sec. 10 deals specifically with the Dept. of Environmental Conservation and asks the department to consider alternate methods of complying with the statute while paying close attention to costs. The effective date ensures that the proposed bill applies to regulations noticed after the enactment date. Discussion followed between Senator Donley and Mr. Campbell regarding application of Secs. 1 through 4. Mr. Campbell noted application to the Legislative Regulation Review Committee under Title 24 and the requirement that committee comments be provided to both the Governor and state agencies. A loop is thus created between the committee and the Governor. Mr. Campbell further noted that under Sec. 3 language, the Governor may return regulations to an agency for two reasons: 1. If they are inconsistent with faithful execution of law. 2. Agencies have need to respond to specific issues raised by the Legislative Regulation Review Committee. The Governor may delegate this authority solely to the Lt. Governor. In response to a further question from Senator Donley, Mr. Campbell explained that the Regulation Review Committee will receive a copy of proposed regulations. At the present time, the Committee merely receives notice that regulations will be forthcoming. The general theme of the proposed bill is that issues brought to legislative attention are those raised by the public. While the Governor now has the authority to deny adoption of proposed regulations, HB 130 would include the Regulation Review Committee in the loop, as far as comments are concerned, up to the end of the public notice period. It allows the committee to address concerns directly to the Governor rather than through a commissioner. Responding to a question from Senator Phillips regarding the impact of passage of HJR 1, Mr. Campbell said that the resolution would make the system work better. It brings the legislature further into the loop. HB 130 contains preparatory language to assist in the process. JOHN LINDBACK, Chief of Staff, Office of the Lt. Governor, next came before committee. He explained that the administration has taken a neutral position on the bill, but he added that, personally, the Lt. Governor is on the "positive side of neutral." Of chief consideration are cost aspects. The administration is very interested in regulatory reform and looks forward to addressing the matter in the interim, in concert with the legislature. As attempts were made to amend the bill in previous committees, it was determined that amendments are sometimes more costly than expected. Mr. Lindback deferred comment on cost aspects to staff from the Dept. of Law. Mr. Lindback agreed that the proposed bill is a reasonable approach to addressing weaknesses in the current process: 1. It is closer to the public perception of how the regulation process works. The Office of the Lt. Governor is occasionally contacted by people who are under the impression that the Lt. Governor can simply not adopt regulations sent to her for filing based on how she feels about them. In fact, filing is a perfunctory ministerial function at this time. 2. It builds in extra steps to ensure that public comment is taken into consideration before regulations are adopted. In his closing comments, Mr. Lindback asked that the administration be allowed the opportunity to review its fiscal notes prior to passage of the bill from committee, if it is amended. DEBORAH BEHR, Regulations Attorney, Dept. of Law, next came before committee. She said she had reviewed the current version of the bill and has no legal problems with it. She attested to having worked closely with the sponsor and expressed thanks for his cooperation in developing language that will work for the administration. Directing attention to page 5, line 16, Ms. Behr voiced need to delete "consideration" and insert "attention." She referenced page 3, line 29, and noted use of "attention" in that instance and need for parallel language on both pages. Parallel construction will clarify that the Dept. of Environmental Conservation will not have to conduct two types of review. Ms. Behr acknowledged that the Governor presently plays an active role in regulations. Some delay in adoption of regulations will result from passage of the proposed bill because of review by the Office of the Governor. Recording of the use of public comments (Sec. 6) is a new function for state government. At the present time, the Alaska Administrative Procedures Act requires that the state agency consider all comments. There is, however, no track record when a commissioner accepts or rejects regulations. Ms. Behr referenced fiscal notes associated with the new function. Speaking to cost compliance, Ms. Behr noted that bill provisions direct state agencies to ask those who fall under the proposed regulations what costs are likely to be and to pay serious attention to those costs. The final section deals with the Dept. of Environmental Conservation and asks that the department give special consideration to comments relating to the cost of compliance and alternative methods. The department does not believe this provision will be problematic. Discussion followed concerning the number of regulations dealt with in a year. Senator Phillips MOVED for adoption of the recommended change at page 5, line 16, substituting "attention" for "consideration." No objection having been raised, the amendment was ADOPTED. Senator Donley directed attention to a subsequent amendment which he explained was earlier added to other legislation relating to regulations. He noted that under the existing regulation system, the administration merely publishes notice of what it intends to adopt. It does not show the actual language. The administration then takes public comment and thereafter adopts "almost anything they want." It does not have to provide notice or conduct public hearings if a subsequent change is made. The proposed amendment requires that if substantial or significant changes are made in the original intent of the regulation identified in the notice, the administration is required to re-notice the regulation and provide copies of what is posed for adoption. Exemptions are similar to those worked out several years ago relating to special boards such as the board of fisheries, board of game, commercial fisheries entry commission, emergency regulations, or regulations adopted to meet federal requirements. In his closing comments, Senator Donley acknowledged that the administration would probably oppose the amendment. Ms. Behr advised that the amendment would be extremely expensive since it would require "new rounds of public comments on virtually all regulations." As an example, she cited fee regulations which would require a new public comment process for each fee change. The administration could find itself in a continuous cycle of redoing regulations and not meeting budget obligations. She suggested that if the amendment is of interest to committee, she be allowed time to obtain fiscal notes from all departments. Ms. Behr noted that the public can bring court challenges against regulations that are not properly noticed. Co-chairman Halford asked if the proposed amendment was considered when the bill was before prior committees. Bruce Campbell explained that amending language is close to that in an earlier "Z" version of the bill. That bill is not now before committee, mostly because of cost considerations. The amendment is similar to ideas proposed by the State Chamber of Commerce for discussion during the summer. It is the kind of concept that might well fit in a broader package. Mr. Campbell stressed that the goal of the proposed bill is not to reek havoc within the system but to try to find small ways to make things work. The proposed amendment is a much more serious fix than the sponsor initially intended. Co-chairman Halford voiced his belief that the regulatory standard should be changed to provide that instead of merely being reasonable to implement a statute, a regulation must be essential to implementation of the express purpose of the statute. Senator Donley said he would not offer the amendment at this time. He further expressed support for Co-chairman Halford's comments regarding need for overall change in the process. Senator Sharp MOVED for passage of SCS CSHB 130 (Fin) with individual recommendations and accompanying fiscal notes. No objection having been raised, SCS CSHB 130 (Fin) was REPORTED OUT of committee with 18 zero fiscal notes and notes from the following departments showing associated costs: Gov/Lt. Gov. $73.7 DEC (Solid Waste) 10.0 DEC (Wastewater) 4.5 DEC (Drinking Water) 6.0 DEC (Seafood Sanitation) 6.5 DEC (Palmer Lab.) 3.2 DPS (Commissioner's Office) 5.0 DOR 20.0 Co-chairmen Halford and Frank and Senators Phillips and Sharp signed the committee report with a "do pass" recommendation. Senators Donley, Rieger, and Zharoff signed "no recommendation." SENATE BILL NO. 167 An Act relating to day fines in certain criminal cases and release of employment information for use in the collection of criminal judgments. Co-chairman Halford directed that SB 167 be brought on for discussion. CHRIS CHRISTENSEN, General Counsel, Alaska Court System, came before committee. He explained that last year the legislature passed law authorizing courts to impose day fines for certain misdemeanor offenses. Pursuant to that law, the Supreme Court appointed an 11-member panel to develop a day-fine plan for implementation. In the course of developing that plan, problems became apparent. Some of the problems could be rectified by simple technical amendments to the original statute. Those changes are incorporated within SB 167. However, there are other problems that are more fundamental. While the proposed legislation does not address these problems, solutions could be incorporated therein. The first problem relates to legislative intent in passing the original law. It is clear from committee comments and floor debate that the primary intention of day-fines law was to reduce the number of misdemeanor offenders who are sent to jail and to increase fine collection rates. Day-fines legislation, as enacted, will not achieve either of those objectives without further changes. Day-fines law excludes most misdemeanors for which people are presently sent to jail. The vast majority (in excess of 85%) of those jailed for misdemeanors are sentenced for one of six crimes: 1. DWI 2. Refusal to take a breathalizer. 3. Driving with license suspended. 4. Driving with license revoked. 5. Misdemeanor assault. 6. Violation of a domestic violence restraining order. As the law currently stands, a day fine is applicable to none of the foregoing. Day fines will thus not significantly reduce the number of misdemeanants clogging the jail system. The second problem is that, as now structured, increased fine collection is unlikely. Imposing a day fine is one of several sentencing options available to a judge. A judge will only impose a day fine, in lieu of a regular fine or jail if the judge feels the defendant will actually pay the fine. Review of state collection practices evidences that current fine collection rates are "incredibly low." People are supposed to pay their fines immediately to the court system. If they do not, we refer them to the Dept. of Law fine collection unit which is funded by program receipts. That unit is resource limited and is only able to go after PFDs to collect fines. The collection rate is only 10%. The day-fines committee believes that until the Dept. of Law receives additional resources for fine collection, judges are unlikely to use this sentencing alternative. The committee thus suggested enactment of legislation to prohibit issuance or renewal of a state license until outstanding criminal fines are paid. A further problem with day-fines law pertains to fine amounts resulting from the day-fines formula. In order to avoid separation of powers questions, the legislature statutorily specified the unit scale and general formula for computing day fines. A person sentenced for a class A misdemeanor can be sent to jail for up to 365 days. The law thus allows for a fine of up to 365 days of salary. The day-fines committee found that that would require imposition of fines of "incredible levels." The committee thus lowered the maximum number of days of a person's salary from 365 to 45 days and discovered that even reduction would continue to require "some incredible fines to be imposed." As an example, Mr. Christensen cited the case of a motorist cited for illegally passing a school bus. That offense is a class B misdemeanor. When an individual is convicted of the offense, it involves a mandatory court appearance, six points on the individual's driving license, and a fine of $100 to $200. Under day-fines law, reduction of the mandated 365 days of pay to 45 days would require that a person with an income of $10,000 receive a fine of $275. A person with income of $40,000 would receive a $1,100 fine, and an individual with a $100,000 income would be fined $2,800.00. Since fines are so high, even after committee reduction, the Supreme Court is reluctant to proceed without legislative review of fine levels and approval of those levels. Mr. Christensen stressed that establishment of the foregoing fines is not a judicial power but legislative power delegated to the courts. He then reiterated need for the legislature to "sign off on this before we implement it because we're not sure it's entirely what you expected." The second largest category of misdemeanors is fish and game offenses. After much deliberation, the day-fines committee excluded those offenses from the plan. Unlike Title 11, which has clear statutory framework with classification of misdemeanors, fish and game law has no clear sentencing structure. There are many different penalty provisions. It is not always obvious which one applies to a particular offense. Because many offense definitions overlap, the same conduct can be charged under different statutes and regulations with entirely different consequences. The committee was unwilling to impose another layer of complexity on this already overly complex system. The committee recommended that the legislature appoint a special legislative committee or interagency working group to assess and restructure fish and game penalty provisions and definitions of offenses. In his closing comments, Mr. Christensen stressed that it will require a significant commitment of resources to implement legislation from last year. The proposed bill takes care of technical problems, but larger fundamental problems remain outstanding. Those will need to be addressed at some time. Responding to a question from Co-chairman Halford, Mr. Christensen referenced the day-fine report which he explained had been furnished to all legislators' offices. He reiterated that even after reduction of the possible fine from 365 days to 45 days, fines are very high for offenses that "people shouldn't do but sometimes they do, thoughtlessly." He urged the committee to review numbers within the report and advise the court system if that is what was intended when authority was provided. Co-chairman Halford said he had no problem with the higher fines. Senator Rieger asked if authority allows the court system to use a fraction of a day as the basis for a day fine. Mr. Christensen suggested that authority to reduce the number of days achieved the same result. He questioned whether application of a percentage of daily pay could be utilized. End: SFC-95, #61, Side 1 Begin: SFC-95, #61, Side 2 In response to an additional question from Senator Rieger, Mr. Christensen explained that the statute allows for use of aggravating and mitigating factors. The court is required to set a presumptive day fine for an offense. If aggravating or mitigating factors are found, the judge may reduce or increase the fine within a certain parameter. Some of the proposed technical changes relate to aggravators and mitigators. Co-chairman Halford voiced his belief that it is not excessive to fine someone $1,000 or $1,500 for "a major violation that endangers people." He further voiced his support for a minimum fine of $5,000 for drunk driving "that becomes a super lien on the vehicle on the second offense." No bank would then loan on a car, and no person would loan their car to an individual after that individual was convicted of DWI. Senator Rieger advised of need to review the schedule of fines, suggesting that some may be too low and others too high. The maximum amount of 365 days was placed in statute so that the judge could fine or sentence to jail for that amount. It appears that when converted to a cash basis, that flexibility was removed either by the manner in which the courts interpreted the legislation or the way the law actually reads. He said he was a proponent of day fines but agreed that the punishment must fit the crime. He attested to problems stemming from erratic enforcement of law. Mr. Christensen directed attention to the fine schedule and noted that a fine for a level six offense (the most serious misdemeanor) if applied to DWI (which is not now covered) could amount to $5,500 for a person with $100,000 income. The problem is that because DWI carries a mandatory jail sentence, a day fine cannot be applied. Both Co-chairman Halford and Senator Rieger indicated support for a fine of that magnitude. Senator Rieger then questioned whether the legislature had the courage to change DWI from the mandatory three days in jail to a stiff fine. The Co-chairman suggested that if the change had an enforcement mechanism, there would be support. Unless there are provisions for something like a super lien, the money will not be collected. In response to a question from Senator Sharp, Mr. Christensen explained that for certain misdemeanors, a judge has the option of imposing the standard jail sentence and fine or the day fine. When a day fine is imposed, there is no possibility of a jail sentence, but the defendant is "hit with a very, very stiff fine." Thereafter, the defendant cannot be put in jail because he or she does not pay the fine because the constitution prohibits imprisonment for debt. As a result of further discussion and concern expressed by Senator Sharp, Mr. Christensen suggested revising the traditional system of jail and a fine to include larger fines based on salary. The fine would then serve as a condition of probation. If it is not paid, the defendant would go to jail. Mr. Christensen questioned whether that would work within the confines of the constitution. He noted that in the present situation, the judge "really has to make his decision up front." The judge evaluates the defendant and determines whether to impose the traditional jail time and fine or a substantial day fine in lieu of the traditional sentence. The judge will not levy a day fine if he or she suspects it will go unpaid. Senator Zharoff questioned whether alternatives such as jail time, a low fine, or a higher fine could be imposed based on the defendant's economic status. Mr. Christensen acknowledged concerns regarding equal protection. Under a day fine, an individual pays a percentage of what he or she actually makes. No matter how poor an individual may be, if the defendant is making money, he or she may receive a day fine--a percentage of salary. The court will frequently impose fines under the traditional system, and people who cannot pay have the option of performing community work service. Statutes have a dollar value for each day of the fine. Judges have the option of allowing defendants to pay day fines with legislatively defined community work service. A judge could not send people to jail "just because they had no money." In response to a further question from Senator Zharoff, Mr. Christensen voiced his understanding that while the statute does not clearly say, day fines are based on a defendant's income rather than combined income of a husband and wife. Discussion followed among committee members concerning disposition of the bill and whether it should be reviewed during the interim in order to incorporate needed fundamental changes in law. Mr. Christensen reiterated that the court is reluctant to proceed with implementation of day fines without further legislative review. The court system will review comments before committees and send the issue back to the day-fines committee for additional work. Senator Rieger expressed support for implementation of day fines. He then voiced support for legislative direction that allows the day-fine schedule to be more flexible (a combination of limits on days, total days, fractions of days, a sliding scale, etc.) and removes prohibition against use of day fines for misdemeanors that are now exempt from application. He then asked if that would be sufficient for the courts to implement the program. Mr. Christensen said he could not predict what the courts might do. He acknowledged that the foregoing changes would help achieve one of the purposes of the day-fine concept: reduction of the number of misdemeanants clogging jails. Co-chairman Halford expressed doubt that there would be sufficient legislative support for inclusion of DWI offenders unless there is assurance of collection of "major, multi thousand dollar fines." Co-chairman Halford voiced his understanding that day fines relate to income but do not apply against assets. He cited instances of individuals who may have low income but "tremendous assets" and suggested that they "ride the very low penalty schedule." He then asked if that aspect was considered. Mr. Christensen acknowledged the concern and suggested that a judge might decide that a day fine is not appropriate for a particular defendant, and the traditional jail sentence and standard fine would be imposed. He stressed that for 90% of the public, the day-fine approach works. Responding to a question from Co-chairman Halford regarding the seasonal nature of income for some residents, Mr. Christensen noted that one of the proposed technical changes requires that judges must believe that the fine will be paid within one year. The original provision required payment within six months. The technical change extends that period to one year. Senator Rieger asked if a judge could suspend a portion of the imposition of a day fine. Mr. Christensen responded negatively. However, a technical change relates to set- aside of conviction. At the present time a judge may impose a suspended imposition of sentence and allow one's record to remain clean. Day-fine law does not allow that. The day- fines committee felt that if the state allowed for suspended imposition of day-fines, it would encourage defendants to pay. The technical change thus allows a judge to set aside a conviction if, in the interest of justice, he believes it is warranted, and the person has paid his or her fine. Co-chairman Halford voiced concern that the proposed bill was introduced on the 100th day of a 120-day session, and the committee which should properly deal with such an issue waived referral to Finance. Further discussion followed regarding inclusion of DWI offenses. Co-chairman Halford stressed need to ensure an arrangement such as three days in jail or a fine of $5,000-- "whichever the judge determines to have the maximum deterrent value on that particular offender. " If there is no mechanism for collection, the state will likely never get paid. Senator Rieger expressed his understanding that the bill as presently proposed would not accomplish all that it should. Co-chairman Halford suggested that the bill be held for additional work and advised that he would bring it back for further discussion at the next meeting. CS FOR HOUSE BILL NO. 17(L&C) am An Act expanding the services that may be offered by an electric cooperative to include sewer and water and gas services when authorized by the Alaska Public Utilities Commission, and to include direct satellite television services; relating to officers of a telephone or electric cooperative; relating to amendment of the articles of incorporation of a telephone or electric cooperative; and providing for an effective date. Co-chairman Halford directed that CSHB 17 (L&C)am be brought on for consideration. JEFF LOGAN, aide to Representative Green, came before committee. He explained that the bill amends Title 10 in three categories: 1. Expansion of the scope of services that can be offered by electrical cooperatives to include water, sewer, natural gas, and direct satellite television. 2. Clarification of voting procedures for amendments to articles of incorporation for electrical cooperatives. New language clarifies how members may vote either at the annual meeting or by mail. 3. Provision of a local option in the titling of board members of electric cooperatives. Under current law, board members are required to be titled: president, vice-president, secretary, and treasurer. Common practice is for the presiding officer of a board to be called the chairman. Some cooperatives use other titles. Proposed changes allow them to select the titles they wish to use. Remaining sections, with the exception of the effective date, are conforming changes. Mr. Logan next directed attention to a draft SCS CSHB 17 and voiced support, on behalf of the sponsor, for amending language therein. Changes incorporated within the draft include: Page 2, line 1, removes inclusion of subsection (7) from the citation of AS 10,25.020 (6) since there is no need to include direct satellite television under APUC regulation. Page 2, line 25, subsection (6) utilizes Senate language which is cleaner. Page 2, line 28, subsection (7) makes clear where direct satellite television services may be offered and where they may not. It also provides a definition. Senator Randy Phillips voiced his understanding that the REA has changed to the RUS (Rural Utility Services) in order to obtain loans for provision of other utilities. Mr. Logan concurred. The Senator then asked if there was objection from gas, water, and sewer companies to expansion of rural electrical cooperatives to other utilities. Mr. Logan responded negatively. Co-chairman Halford voiced his understanding that water, sewer, and gas services are provided through a system but not certified or regulated by APUC. Co-chairman Frank voiced his understanding that it is not anticipated that rural electrical coop provision of water, sewer, or gas services would overlap areas where existing utilities provide these services. The proposed bill will only apply to areas where there in presently no such service. Mr. Logan agreed that it is not the intent that service areas overlap. DAVE HUTCHENS, Alaska Rural Electric Cooperative Association, next came before committee. As background information he explained that the proposed bill represents the first amendment to AS 10.25, the electric telephone cooperative act, since the 1988 code revision. It contains a collection of needed items due to a change in present circumstances or the fact that some items were overlooked when revision occurred. Speaking to concern raised by Senator Phillips questioning electric coop expertise in other utility areas, Mr. Hutchens explained that "this section does not confer the right on the electric cooperatives to go out and provide this service." It merely places provision of services within their corporate powers. It would then be legal for them to engage in this business, if authorized to do so by the APUC. Speaking to the change from REA to RUS, Mr. Hutchens referenced combination of all rural utility loan programs within the Dept. of Agriculture into one entity. The reason for the change was to allow electric cooperatives that have a good track record of management success to extend sewer and water in rural areas where needed. For loans to rural entities for small sewer and water systems that do not have a good management record, the proposed bill would allow rural electric coops to step in and provide management services, where necessary, to protect assets built with USDA loans. That is the national push behind the issue. In response to concern raised by Senator Phillips, asking if a rural cooperative could take over gas services. Mr. Hutchens replied, "Absolutely not." The rural coop would have to go before the APUC and make a case that they could do the job better than Enstar. He then voiced his understanding there is no chance they could do that. Senator Rieger asked if certificates of convenience and necessity are always exclusive. Mr. Hutchens answered, "In practice, it has been . . . for sewer, water, gas, and electric." Local telephone service has also been exclusive in practice. Responding to an additional question from Senator Phillips, Mr. Hutchens explained that RUS provides ready funding to rural electric coops for water and sewer projects. There is $900 million in the federal budget for this year. Senator Phillips again posed a question regarding expertise. Mr. Hutchens pointed to common practice in a number of states for the electric cooperative to also provide sewer and water service. The management system is in place. Specific expertise in sewer and water is then hired. Noting that the Dept. of Environmental Conservation is attempting to construct sewer and water projects in a number of areas, Co-chairman Frank asked if cooperatives were working with the department. He suggested that coops could provide both management and maintenance expertise that was lacking in the past. Senator Sharp suggested that for small water and sewer utilities that are now precluded from selling out to an existing electric cooperative if they chose to "get out of the business," the proposed bill offers an opportunity for improvement of service by an entity with greater financial capabilities. Mr. Hutchens stressed that in Alaska cooperative members are not "hungry after the idea of getting into sewer and water." Members feel it is good to have authority to do so if the right opportunity comes along, or it makes sense for the coop to do so. Mr. Hutchens acknowledged that the Alaska Village Electric Cooperative which services 50 villages in the western part of the state is willing to take on whatever services might be necessary to make their communities more viable. Naknek Electric is also interested in being able to provide sufficient natural gas for local service. Senator Sharp MOVED for adoption of SCS CSHB 17 (9-LS0096\W, Cramer, 4/26/95). Senator Rieger OBJECTED and inquired concerning the difference between Senate and House versions, specifically referencing new language at page 2, relating to direct satellite television. Mr. Logan explained that satellite television differs from cable in that programming is received by a satellite dish and relayed to users. The utility would not offer the service itself. Cooperatives would "service" the service. They would provide administrative and billing services. Mr. Hutchens added that the National Rural Telecommunications Cooperative is owned by a national collection of coops. NRTC has its own programming package put together in direct negotiations with programmers such as Disney. Senator Rieger next questioned inclusion of the following: to a location that is not part of an area certificated by the Alaska Public Utilities Commission to a cable television company on the effective date of this Act. Mr. Hutchens explained that areas cooperatives would like to serve with direct satellite television are "the scattered . . . housing areas in their electric service areas." As an example, he cited areas in the Matanuska Valley, Kenai Peninsula, Copper Valley, and rural areas outside of Fairbanks where it is not feasible to have a cable television system. The foregoing was added as a means of assuring cable television companies that electric coops will not be "poaching their territory." Coops would not be serving areas that have cable television. Mr. Hutchens acknowledged that the above does not forego direct satellite television service in competition with cable delivery. However, that would be done through "somebody like RCA- Hughes" rather than by an electric coop. End: SFC-95, #61, Side 2 Begin: SFC-95, #63, Side 1 In the course of further discussion of satellite television delivery, Mr. Hutchens explained that the consumer would own his or her own satellite dish. The coop would merely provide billing services. Language within the bill is intended to allow for provision of service "if and when the satellite actually has Alaska in its footprint . . . . Two years is the projection on that." Scattered housing would be the market area. The benefit of coop provision of this service rests in the value added service and negotiated rates on programming packages through NRTC. Responding to a question from Senator Rieger, Mr. Hutchens advised that homes located in an area certificated to a cable company, would fall outside the area that could be served through a coop. If the area is not served by cable when the proposed bill becomes law, it could be served by a cooperative. Senator Rieger inquired concerning the position of the sponsor on the proposed amendment. Jeff Logan voiced concern regarding passage of the legislation if the amendment is incorporated. He then expressed a preference for the draft SCS CSHB 17 as written. Senator Rieger said he would not proceed against the wishes of the sponsor but expressed concern over backing down because a regulated utility "doesn't want the competition." Senator Zharoff raised concern that in smaller communities, provision of television services is a private enterprise. He suggested that service by a utility would limit or prohibit service by the private sector. In response to a further question by Senator Rieger, Mr. Hutchens explained that the cable television industry was not convinced that language passed in the House bill would provide sufficient protection against competition from satellite service. New language contained within subsection (7) at page 2 was thus incorporated within the Senate committee substitute. Senator Rieger MOVED to withdraw his proposed amendment. Co-chairman Frank then MOVED for adoption, saying that competition should be allowed. Regulation should only be necessary where competition is not possible because of economic reasons. Senator Sharp voiced concern that competing services, regardless of technological advances, in a small service area may dilute the number of customers needed for the service to be viable. Senator Zharoff raised a question regarding reversal of services provided by a coop should a community or private enterprise seek to take over service provision. Co-chairman Frank clarified that the proposed amendment would not grant exclusivity to existing cable operators relative to direct satellite television program services. The change would merely open competition to electric utilities that choose to provide the service. Co-chairman Halford raised a question regarding certification of cable television services, and discussion of the issue followed. Senator Sharp expressed concern over possible unequal competition if one segment of the industry is certificated and regulated by the APUC while the other is provided authority by the legislature, through statutes, and bypasses the regulatory process. Co-chairman Frank said that the proposed amendment does not go as far as he would like. He voiced a preference for allowing technology to advance competition for the benefit of the consumer. In response to additional questions regarding regulation, Mr. Hutchens advised that cable television companies that serve ten or more customers are to be certificated by the APUC. None of the companies are regulated in terms of rates, unless consumers petition for economic regulation. The company in Juneau is the only regulated cable service provider in Alaska. Co-chairman Frank cautioned that it is not good policy to artificially restrict competition where technology is allowing it to happen. Senator Zharoff questioned allowing a utility to provide a service that is not governed by APUC in possible competition with service that has undergone the certification or regulatory process. Co-chairman Halford voiced his understanding that the proposed bill merely allows utilities to engage in a form of competition that is presently available to any other entity, since provision of television services is unregulated. The Co-chairman then called for objection to adoption of the proposed amendment. No objection having been raised, the amendment was ADOPTED. In response to a further question from Senator Zharoff, Mr. Hutchens explained that the bill would simply grant utility cooperatives authority to provide needed services not provided by another entity. Senator Sharp MOVED for passage of SCS CSHB 17 (Fin) with individual recommendations. Senator Zharoff OBJECTED and advised of need for additional review. Co-chairman Halford called for a show of hands. The motion carried on a vote of 4 to 2. SCS CSHB 17 (Fin) was REPORTED OUT of committee with zero fiscal notes from the Dept. of Commerce and Economic Development, one from the Division of Banking, Securities, and Corporations and the other from the Alaska Public Utilities Commission. Co-chairmen Halford and Frank and Senators Phillips, Rieger, and Sharp signed the committee report with a "do pass" recommendation. Senators Donley and Zharoff signed "no recommendation." CS FOR HOUSE BILL NO. 44(FIN) am An Act relating to reporting by permittees, licensees, and vendors; relating to municipal regulation of charitable gaming; providing that a political group is not a qualified organization for purposes of charitable gaming, other than raffles, and relating to those raffles; relating to identification to the public of each permittee that will benefit from the sale of each pull-tab series and each bingo session; providing that the proceeds from charitable gaming, other than certain raffles conducted by a political organization, may not be contributed to a political party or other political group; and providing for an effective date. Co-chairman Halford directed that CSHB 44(Fin) am be brought on for discussion and directed attention to SCS CSHB 44(STA). TOM ANDERSON, aide to Representative Martin, came before committee. He explained that under the proposed bill political permittees would not be allowed. No political organization or group may hold a charitable gaming permit. The bill continues to allow remaining, non-political permittees to contribute and donate to candidates, but distribution of such funds has been tightened. Political groups may continue to obtain raffle permits. Mr. Anderson urged passage of the bill with proposed amendments. DENNIS POSHARD, Director, Charitable Gaming Division, Dept. of Revenue, next came before committee to speak to the technicalities of the bill. Co-chairman Halford directed attention to Amendments 1, 2, and 3. Duplicate amendments contained within a packet of information highlighting differences between House and Senate versions of the bill and the three amendments logged-in and stamped for distribution to committee caused temporary confusion. The meeting was recessed for review and comparison of the amendments. RECESS The meeting was recessed at 4:50 p.m. and did not reconvene on this date.